Taiwan's Industrial Districts and Economic Development

This chapter considers the development of four important Taiwanese industrial clusters: bicycles, machine tools, integrated circuits (ICs), and information and communication technologies (ICT) hardware. Three of these clusters grew out of the networked production of Taiwan’s rural industrialization process. The exception was the IC industry, which was created by the state in light of private capital’s reluctance to invest. While the IC industry did not originate out of local networks of industrial production, it did draw on networks of Taiwanese technologists abroad to develop. All four industries shared the common feature of state-supported institutions to diffuse technology to local firms. The industrial clusters that have proved sustainable are either characterized by relational value chains supported by government technical institutions (bicycles and machine tools) or modular value chains where Taiwan was able to enter high-value segments early in its cluster development.